New Delhi Moody’s Investors Services said state-owned oil marketing companies (OMCs) in India lost an estimated $6.5-7 billion on petrol and diesel sales between November 2021 and August 2022 due to the moratorium on retail fuel prices . Moody’s said their earnings could weaken this year as they are yet to recover these losses.
Government’s condition 22,000 crore grant to Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd to cover loss incurred by OMCs on sale of Liquefied Petroleum Gas (LPG) between June 2020 and June 2022. Credit positive. (HPCL), but the global rating firm indicated that this is not enough.
“We estimate that state-owned refining and marketing companies lost approximately $6.5-7 billion in revenue on petrol and diesel sales from November 2021 to August 2022,” Moody’s said in a report. Provide partial relief’.
Moody’s estimates IOCL’s revenue loss on petrol and diesel sales at $3.0 billion to $3.2 billion, while BPCL and HPCL are expected to lose $1.6-1.9 billion.
“The 220 billion grant is credit-positive as it will provide income and cash flow support for Indian refiners. However, irrespective of the grant, we expect significant losses incurred by these companies on the sale of petrol and diesel during the first half of the financial year 2022-23 in the financial year ending 31 March 2023 (FY 2023). Refiners’ earnings will remain weak. For which they have not received any compensation so far.”
“Despite higher feedstock costs and increase in international petrol and diesel prices, selling prices of petrol and diesel in India, which account for about 55% of total sales of petroleum products in the country, did not increase at the same pace,” Moody’s said. .
“Except a small increase of approx. 10 per liter between 22 March and 6 April 2022, the net realized prices for refiners have remained largely unchanged from November 2021 onwards,” it said.
During this period, the easing of movement restrictions and an improvement in demand after the start of the Russia-Ukraine conflict have led to a significant increase in crude oil prices, which averaged around $80 per barrel between January and August 2022, compared to around $80 per barrel. $104 per barrel. barrel in November 2021, Moody’s reported.
“While crude oil and international transport fuel prices have fallen from highs seen earlier in the year, they are subject to volatile industry environment and geopolitical developments. Net real prices for Indian refiners in crude oil or international product prices Any increase without an increase in earnings will weaken their earnings and cash flow outlook,” it said.
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